In 2012, the Board, through its Independent Committee, felt it would be prudent, and has since retained the services of an industry consultant to assist in identifying possible alternative sources of zinc concentrate after the expiry of the Supply and Processing Agreement.
Financial and Operating Highlights (Fourth quarter 2012 compared to the fourth quarter 2011)
Earnings before finance costs and income taxes in the fourth quarter of 2012 were $24.3 million compared to $2.4 million in the same quarter a year ago. The $21.9 million increase was mainly due to higher zinc sales, premiums, processing fee and recoveries. In addition, the fourth quarter of 2012 also benefitted from the absence of a non-recurring $7.1 million cost increase for additional pension benefits and early retirement provisions for the collective agreement, which was recorded in the fourth quarter of 2011.
Cash provided from operating activities, before net changes in non-cash working capital items in the fourth quarter of 2012 was $17.4 million compared to $18.0 million in the fourth quarter of 2011. During the fourth quarter of 2012, non-cash working capital increased by $36.5 million. The increase in working capital resulted primarily from an increase in inventories and accounts receivable, partially offset by an increase in accounts payable and accrued liabilities. The increase in inventories in the fourth quarter was a result of additional deliveries of zinc concentrate that were received. The increased concentrate availability allows for more flexibility in blending the various feeds, ensuring a gradual transition to the new feed mix in 2013.
Financial and Operating Highlights (2012 compared to 2011)
Earnings before finance costs and income taxes in 2012 were $66.7 million compared to $59.9 million in 2011. The $6.8 million increase was mainly due to higher zinc premiums and processing fee, partially offset by lower zinc sales and by-product revenues.
Cash provided by operating activities in 2012, before net changes in non-cash working capital items, was $64.6 million compared to $71.5 million in 2011. During 2012, non- cash working capital increased by $39.3 million due to an increase in accounts receivable and inventories and a decrease in the income taxes payable. During 2011, non-cash working capital decreased by $55.3 million due to a decrease in accounts receivable and inventories and an increase in the income taxes payable.
Today, Bob Sippel resigned from the Fund's Board of Trustees. Mr. Sippel has been a Board member since April of 2004. His expertise in both zinc markets and the zinc industry was invaluable to the Fund. John Swidler, on behalf of the Board would like to thank Mr. Sippel for his support and contribution.
Neil Wardle joined the Board of Trustees today. Mr. Wardle was appointed Chief Operating Officer of Xstrata Zinc Canada in July 2012. Prior to this, he was the Executive General Manager of Britannia Refined Metals Limited which is part of Xstrata plc. Mr. Wardle has also held various other mining and metallurgical roles in Australia. He holds a Bachelor of Applied Science in Metallurgy from the South Australian Institute of Technology.
A full version of the year-end 2012 Management's Discussion and Analysis ("MD&A") and the Audited Consolidated Financial Statements will be posted on the Fund's website, http://www.norandaincomefund.com/investor/financials.html today, February 12, 2013 and they will be available on www.sedar.com on February 13, 2013. Readers should be advised that the summarized communication presented in this press release is limited in its disclosure. It is not a suitable source of information for readers who are unfamiliar with the Fund, and it is not in any way a substitute for reading the Audited Consolidated Financial Statements and MD&A because a reader relying on this summary alone might overlook decision critical information.
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